LONDON (ShareCast) - Shareholders have warned directors at Xstrata, the FTSE 100 mining company, that they risk being removed if they block the 56bn pound merger with Glencore. Glencores final offer increased in dramatic circumstances last week after the intervention of Tony Blair, the former prime minister will go to Xstratas board tomorrow. The Sunday Times can reveal that Blair received about 1m dollars (625,000 pounds) for attending a three-hour meeting at Claridges, the Mayfair hotel, last Thursday night. The fee was split between the two companies. Blair was called in by Ivan Glasenberg, Glencores chief executive, at the suggestion of Michael Klein, the veteran former Citigroup banker who has been advising the two sides. Tomorrows offer document will set out improved merger terms 3.05 Glencore shares for each Xstrata share, rather than 2.8 but also demand that Glasenberg is installed as chief executive of the merged group. That post had been reserved for Mick Davis, his opposite number at Xstrata. Glencore will also insist on a rethink of the controversial 172m pounds golden handcuffs deals for Xstrata management, with a warning that any new incentive plan must be acceptable to shareholders, the newspaper reports.
Spain is under pressure to make a formal request for aid within the next few days as ministers battle to prevent the latest single-currency rescue package from falling apart. Mario Draghi, the president of the European Central Bank, revealed plans on Thursday to buy the bonds of struggling European countries in unlimited quantities a decision heralded as marking the beginning of the end of the crisis. However, they will be activated only if a struggling government formally requests help from Europes rescue fund, the EFSF and agrees to budget targets and other conditions. European debt and equity markets have rallied on the back of Draghis plan. A meeting of European finance ministers in Cyprus next Friday and Saturday will see the Spanish government face demands to accept the conditions allowing the plan to be activated fully. I think everyone would like to see Spain make the request by the end of next week, otherwise theres a risk the markets will start to get nervous again, said one source close to the ECB, The Sunday Times reports.
Energy services firm Wood Group is expected to bounce back into the FTSE-100 index when the quarterly reshuffle is calculated on tomorrows closing prices. Incoming chief executive Bob Keiller will be keeping his fingers crossed that the promotion goes through after the Aberdeen-based firm narrowly missed out on a return to the top flight in Junes rankings. Tracker funds could create demand for up to eight million Wood Group shares if the firm pushes back into the Footsie, nearly 11 times the number of the companys shares traded in an average day. The stock dropped down into the FTSE-250 last September, having won promotion in March 2011. Keep an eye on shares in Edinburgh-based chip maker Wolfson Microelectronics this week after Peel Hunt analysts Alexandra Jarvis and Paul Morland predicted that brutal competition within the electronics sector could lead to further consolidation and tipped Samsung to buy Wolfson and Apple to buy Imagination Technologies, according to The Scotsman on Sunday.
Nearly 3,000 African gold miners have taken FTSE 100 giant Anglo American to the High Court, claiming that poor health and safety conditions have caused their debilitating lung diseases. Hausfeld, a legal firm that has battled multinationals over alleged support for the former apartheid regime in South Africa, recently lodged a claim on behalf of 1,056 people who worked in the country's mines. This adds to around 1,600 represented by London-based lawyer Leigh Day, which has already filed High Court claims against Anglo's South African subsidiary. The miners suffer from silicosis, a scarring of the lungs for which there is no known cure. There are several cases being made against Anglo both in the UK and South Africa related to deep-level gold mining from the 1960s to the 1990s, The Independent on Sunday reports.
Record low interest rates risk becoming a "long-term crutch" which hinders the repair of the UK economy, the Bank of England's chief economist has warned. Spencer Dale's comments yesterday underlined the nervousness of the hawkish faction on the Bank's Monetary Policy Committee, which has held interest rates at 0.5% since March 2009 and pumped £375bn into the recovery through quantitative easing. Mr Dale argued, in a speech in Dublin, that drastic measures taken by rate-setters as well as the lenders' relaxed stance could be delaying the "rebalancing and restructuring that our economy needs", for example by allowing failing business to survive. "Monetary policy can and should provide short-term support in times of need, but it must avoid becoming a long-term crutch," he said, according to The Independent on Sunday.
British Airways is believed to be considering an alliance with Qatar Airways after struggling Australian airline Qantas severed its 17-year alliance with BA. Qantas has agreed a similar ten-year deal with Emirates. The Australian carrier will move its Asian hub from Singapore to Dubai. Willie Walsh, chief executive of BAs owner, International Airline Group, is known to be a big admirer of Qatar Airways and has admitted that there have been discussions with Middle East carriers, writes The Financial Mail on Sunday.
Business secretary Vince Cable has said that an expansion of Heathrow airport is "not going to happen" because of the breadth of political opposition to it. Speaking to the BBC's Andrew Marr show, the Liberal Democrat said "there is an absolutely clear coalition commitment not to expand Heathrow". "There is a very formidable political coalition against it: my party is totally opposed; Boris Johnson and the London Conservatives are opposed; the Labour Party seems to be moving against it," he added. The business secretary's comments come after the Government launched a commission on how to boost Britain's aviation capacity. Patrick McLoughlin, the new transport secretary, told MPs last week that the new commission set up to consider the Heathrow question will be asked to advise ministers on how to ensure any bid to build new airport capacity in south-east England goes as quickly as possible, The Sunday Telegraph reports.
Thomas Cook has agreed a deal to block-book tens of thousands of seats on Easyjet, the no-frills airline. It is thought to be the first time that Easyjet has sold seats wholesale to another company. The tour operator will use the Easyjet seats as part of its package holidays for next summer. The tie-up, which could be announced this week, will cover 80,000 trips, representing about 3% of Thomas Cooks capacity. The tour operator has scaled back the size of its own airline over the past year in an effort to slash costs, trimming six planes from its fleet. Insiders, though, insisted that the arrangement with Easyjet was not prompted by these cuts. The sources pointed out that Thomas Cook has regularly worked with other airlines, including Monarch, and argued that the deal with Easyjet would allow it to offer greater flexibility on the length of holidays that it sells, The Sunday Times explains.
Royal Bank of Scotlands plan to float its Direct Line business next month could be hit by a referral of the car insurance industry to the competition authorities. The Office of Fair Trading has already expressed concerns over certain practices in the sector and is expected to decide within weeks whether the Competition Commission should engage in a full inquiry. The OFT recommended a provisional referral of the sector to the Commission in May, but has been consulting the industry over the summer. Direct Line includes a strong motor insurance operation, with brands including Direct Line, Churchill and Green Flag, and a referral would impact on sentiment ahead of the estimated £3bn flotation. There have also been warnings that RBS and its advisers could be tempted by the rebound in Direct Lines performance to price any issue at the top of the range and thereby deter institutional investors, The Scotsman on Sunday says.
A leading Facebook investor has dumped shares worth more than $100m (£62m), delivering a fresh blow to the embattled social network. The disposal is the largest yet from Dustin Moskovitz, a former Harvard University room-mate of Facebooks founder, Mark Zuckerberg. Moskovitz, 28, had already raised more than $30m in a series of small stock sales since a block on early backers cashing out expired last month. Late last week, however, he sold 5.7m Facebook shares, which generated a $109m windfall for the worlds youngest billionaire. Moskovitz, born eight days after Zuckerberg, retains a $2.4bn stake in the company, The Sunday Times says.